Some Banks Easing Some Lending Standards

The Federal Reserve reported on Monday in its Senior Loan Office Opinion Survey on Bank Lending Practices for January that "generally modest fractions" of domestic banks have reported eased their standards across major loan categories over the past three months.

The Federal Reserve reported on Monday in its Senior Loan Office Opinion Survey on Bank Lending Practices for January that “generally modest fractions” of domestic banks have reported easing their standards across major loan categories over the past three months. At the same time, the senior loan officers saw demand for business loans, prime residential mortgages and auto loans strengthening, while demand for other types of loans was more-or-less unchanged.

Within consumer lending, a “moderate fraction” of domestic banks reported an easing of standards on auto loans, while standards on other types of consumer loans didn’t change. Likewise, a “moderate fraction” of respondents continued to experience stronger demand for auto loans, while demand for credit card loans was reportedly unchanged.

The January survey also included three sets of special questions, one of which asked banks about changes in their CRE lending policies over the past year. In response to that set of questions, respondents indicated that they had eased selected CRE loan terms over the past 12 months.

Gas prices eat into consumer budgets

The price of gas has spiked lately, unexpectedly so, with the AAA Daily Fuel Gauge Report putting the average U.S. price of a gallon of regular at $3.523 on Monday. That’s up from a week before, when the average was $3.349, and a month earlier, when the average was $3.299. This time in 2012, the average was $3.478.

There seems to be more than one reason for the sudden increase. Oil prices are up, trading higher because the American and Chinese economies are considered in better shape than they were recently, which if true would presumably increase demand. Also, domestic refineries are now doing seasonal maintenance, and inventories are down.

Last year, U.S. gas prices were relatively high. The U.S. Department of Energy reported recently that U.S. households spent an average of $2,912 on gasoline in 2012, which amounts to roughly 4 percent of pretax income. That’s the highest percentage in 30 years—the real price of gas was also very high in the early 1980s—which might have had a deleterious impact on consumer spending patterns for other items. “The effect of the higher prices in 2011 and 2012 outweighed the effect of reduced consumption,” Energy noted in a press statement, meaning that conservation efforts haven’t put the brakes on increased spending on gas.

Restaurant operators pessimistic

Restaurateurs are worried that one thing Americans will spend less on going forward is restaurant food. The National Restaurant Association reported over the weekend that its Restaurant Performance Index declined in December to 99.7, down 0.2 percent from November. That marks the third consecutive month in which the index stood below 100, which signifies contraction in the index of key industry indicators.

“Operators remain decidedly pessimistic about the overall economy, with only 17 percent saying they expect business conditions to improve in the next six months,” Hudson Riehle, senior vice president of the research and knowledge group for the association, said in a press statement.

A new record for Wall Street on Monday? No. The Dow Jones Industrial Average backed away from record high territory on Monday, losing 129.71 points, or 0.93 percent—nearly all the ground it had gained on Friday. The S&P 500 was down 1.15 percent and the Nasdaq declined 1.51 percent.